Investors bought $6.8-billion of Canadian commercial real estate in the first quarter, up 12.2% from the same period a year earlier. Some of the increase can be attributed to larger transactions that were finalized in the first quarter of 2014, including the approximate $500-million purchase of Toronto’s upscale Bayview Village mall which was first reported by The Financial Post.

“Each distinct investment cycle is unique and this current cycle stands out for its resilience,” said John O’Bryan, chairman of CBRE, in a statement. “The purchaser profile has varied significantly over the past year. REITs were dominant initially, only to have private buyers come to the forefront and now pension funds are moving into an increasingly dominant position.”

He says pension funds are expected to become increasingly aggressive as they allocate even more money for real estate driven by access to cheap capital.

Pension funds accounted for 33.7% of total investment activity in the first quarter, just behind private investors who usually are responsible for about 45% of activity. The REITs were down to about 11.4% of activity in the first quarter.

“When you can buy commercial real estate for almost the same price as building it new, there is some hesitation and more financial scrutiny; however, pension funds and other investors are in need of income producing investments and by most metrics, commercial real estate
has a very strong track record over the past decade,” said Ross Moore, director of research, in the release.

Office buildings have been the main driver of deals, accounting for just over $2-billion of activity in the first quarter. Retail investment was about $1.9-billion for the quarter followed by land purchases at $1.27-billion.

Eastern Canada also drove the market with investment activity $3.6-billion in Toronto and $1.1-billion in Montreal.